A reasoned award results in vacatur.

Posted by on Mar 3, 2010 in arbitration, Stockbroker issues | Comments(0)

I’m not a big fan of reasoned arbitration awards. I think that they provide fodder for a motion to vacate (what others might call an appeal). What they really do is answer the age-old question “What were the arbitrators thinking?” Having served as an arbitrator, trust me, you don’t want to know.

But the arbitrators in a breach of contract case involving Raymond James Financial Services and three former brokers felt a need to share their opinions. In doing that, not only did they get it wrong (and sully the name of a very good in-house lawyer at Raymond James), but they bought and paid for a motion to vacate. The tortured reasoning of this arbitration panel deserved to be put under a microscope. They didn’t seem to have a clue.

It was clear that the arbitrators wanted to award money to the brokers. They could have done so without explaining themselves. Had they not provided an explanation, which they were entitled to do, the brokers would have gotten their money. But noooooo, the arbitrators wanted to “share”. And in doing so, the case found its way through the District Court, where the award was vacated, and the Fourth Circuit Court of Appeals, where the opinion is lengthy but comes down to this simple analysis – the arbitrators blew it. And how does the court know? Because the arbitrators demonstrated it in their award.

For those of you that want reasoned awards, here’s the poster child for why they have no business in arbitration.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida. I am Marc Dobin.

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